Much like selling a home, roofing contractors hoping to sell their business should ensure the business is appealing to potential buyers.

10 Keys to Selling Your Roofing Company in 2025

Whether it’s through private equity or management buyout, these 10 tips will make your business shine with buyers

In the last two years, Beacon Exit Planning has seen a rise in buying and selling activity in the specialty contractor marketplace. This activity resembles the high-price multiples cyclical runs witnessed in previous decades.

The recent acquisition activity is fueled by private equity (PE) discovering that contractors were an essential business that remained open during the COVID shutdown. Now, they see roofing contractors as an attractive, profitable, fragmented, stable market ripe for longer-term growth investors.

Historically, most contracting companies sold via a management buyout or gift to the family, though this PE activity and attractive multiples have contractors reconsidering their options.

For example, Beacon has had an exit planning relationship with a contractor since 2015. The founder successfully transferred the company to his family several years ago. Now, with the father’s blessing, the second generation has taken the company to market with us. Their strategy paid off handsomely, with offers exceeding $35 million.

Several years ago, this contractor requested a plan for selling the business as an option on the table. We began focusing on building value, cleaning up all the distractions, locking in the management team, tax mitigation strategy, and estate planning.

Those contractors who would like to explore selling in the next five years (who do not have a formal exit plan) can test the water by:

• Acquiring a market study to review the company’s financial strength, efficiency, competition benchmarks, and potential buyers based on your size, location, niches, and synergies
• Implement several strategies to build value and make the company more attractive
• Due diligence pre-game review to eliminate all the distractions and issues that could kill a deal
• Market strategy to position the company in the best possible light to a buyer and emphasize its strengths while differentiating it from the competition

The 10 keys listed below are sound business practices in preparing your company for sale.

1. Valuation

Get your company appraised by an accredited business appraiser. This exercise will allow you to determine and understand what creates or detracts value in your business. Remember, each path (sale, private equity, ESOP, management buyout) has a different value (called “range of value”) and different tax ramifications that can erode your proceeds by over 55%. An accredited appraiser can show you how the company is valued and how the various classes of assets or stock will be taxed.

The bottom line is that the owner needs a realistic understanding of the business's value and the tax ramifications of the transaction. These are critical components in setting realistic expectations for the seller to realize success in the transaction and achieve post-exit financial goals.

2. Jump Start

Owners know how to run a business but have never sold a company. They only get one chance to get this right.

Start the sales preparation process by meeting with your adviser (exit planner or M&A adviser) a year before you are ready to sell. This time will allow you to align all the moving parts properly in the sale process. Much like selling your house, you will need time to “dress up” the business so it looks attractive to potential buyers.

Dressing up doesn’t simply mean cleaning the facility but also scrubbing the financials. This will be critical in completing the due diligence process with minimal adjustments by the buyer. A professional adviser will assist you in the “clean up” process by showing the seller the areas of improvement.

They will also assist by creating the Teaser/Executive Summary and Confidential Business Review for your company. Marketing and financial information will be a commercial for your business, outlining your business' strengths and weaknesses with particular attention to its strengths.

Several weeks ago, a contractor called us a day before a meeting with a regional competitor interested in purchasing his business. He and his attorney wanted to know the “value” of his company by applying an industry multiple to unrealistic value and a speculative EBITDA.

This was not the time to understand the value of the business. At this point, the seller was stuck negotiating with one buyer. There is very little a professional can do for the seller in the 11^th hour. The unprepared contractor was reacting, needed to be in sales shape, seemed desperate, and would ultimately leave a lot on the table if he could sell.

3. Don’t Go Alone

As in the example above, do not deal with potential outside buyers alone. For many, transitioning a business is an emotional process. An exit planner or an M&A adviser can save you time and frustration by qualifying the buyer while giving you the time to prepare for the sale.

Situations like the example referred to above put the buyer in a position of strength. Ideally, you want several potential buyers competing for your business. Buyer representation is critical to assist with this negotiation for the best possible price and terms, manage the process, and keep the emotions away from the process.

4. Succession

Replace yourself with a team that can operate the company without you. This will require systems that measure results in consistent quality and efficiency that affect the bottom line. Whether selling to an outside buyer or internally to employees, you will need a strong management team and bench strength to make your company more valuable.

Remember, what the buyer wants in your business is not the equipment, the facility, or the products. They want cashflow, and your management team will be instrumental in helping transfer that cash flow to the buyer with reduced risk.

Consider locking in key managers before going to market with golden handcuffs to secure the managers after the sale.

5. Change the C-Corp to an S-Corp

Consider making the election to change your C-Corp to an S-Corp. There are distinct disadvantages to transitioning your business while being a C-Corp, one of them being the double taxation inherent in the C-Corp structure and the other being the built-in gain tax that stays with a corporation for 10 years. The built-in gain tax essentially eliminates the capital gain tax treatment for an S-Corp that was previously a C-Corp. Early planning will help you avoid this pitfall.

6. Recast Your Earnings

Private owners must clean up their books and recast their financials to reflect normalized earnings by adding discretionary expenses. This can include salaries/bonuses paid to family members, business vehicles, memberships, travel, and entertainment.

A buyer would not necessarily incur these items, leading to a “normalized” earnings potential for the business. If possible, these expenses should be eliminated from the financials because these adjustments are usually a point of contention with the buyer as they are often difficult to prove.

7. Sell the Opportunity

Yes, your financial strength and future cash flow are central to the valuation and pricing of your company. But what niches and highly profitable aspects of your business will differentiate your company from the competition? You must be able to tell a story in your marketing position that is clear, measurable, and defines your competitive advantage. This sale aspect can increase your “multiple” for a higher price.

8. Clean Up Any Distractions

When you sell a house, you take care of things you may have learned to live with before the sale but that would distract the buyer. The key is to clean up any “maintenance” distractions and to disclose everything that could cause surprises that could kill the deal.

The buyer’s due diligence process will examine more than just your financials. They will look into every corner of the business, including key contracts, supplier agreements, legal agreements, insurance policies, company health and pension plans, human resource policies, corporate records/minutes, etc.

The key is to perform pre-due diligence before going to market. The adviser presents the business from the buyer’s perspective, making everything clear and transparent with as few distractions as possible.

9. Be Prepared to Negotiate Terms

Every deal is different, but these items are negotiable and will determine the price:

• Will you keep some assets in the deal, like an auto or truck?
• Will you be paid in a lump sum or installment payments?
• How large a down payment will you require, and what will be the length of the installment payments?
• Are you flexible about selling assets or equity?
• Are you willing to work as a consultant or manager for the buyer after the closing?
• Are you willing to sign a non-compete agreement and the limits of restrictions?
• Are you willing to finance the balance of the transaction?
• Are you willing to earn the balance of the sale price?

The devil is in the details. While you may think you are getting a good deal, the transaction details will be critical in determining your final amount.

10. Pedal to the Metal

The buyer does not want to see shrinking margins or a loss in sales during his diligence. The owner needs to continue driving the business and let the M&A professionals drive the sales process and manage the buyer — this is what they do.

We often see owners who have one foot out the door only to see the deal go south. They are left with a declining business and few opportunities to sell. It is best to keep the owner at arm’s length from buyers in the due diligence and bring him into the critical negotiations period at the end of the process.

Beacon & NRCA will host a two-day contractor owner educational seminar, “Understanding Your Exit Options,” in Phoenix, Ariz., on Jan. 15-16. Please visit NRCA.Net for more information.